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CPI: In-Line Report, Still Slight Deceleration In Trend

November 14, 2018
Bottom Line: CPI rose modestly in October as expected. Core CPI was up 0.2%, 2.2% versus a year ago, but is still showing hints of deceleration as the last 3-months have averaged 1.6% annualized gains, well below the 6- and 12-month gains of 2.0%, and 2.2%, respectively. Owner's Equivalent Rent, a key driver of the price of shelter and about a third of core, rose 0.3%, slightly higher than in September. But OER is still decelerating modestly on a trend basis. Used car prices also rebounded, boosting the commodities component within core. Overall inflationary pressures at the consumer level still remain modest to moderate but are decelerating slightly compared to year-ago levels.

The CPI ROSE by 0.3% in October, compared with market expectations for an increase of 0.3%.
  • Food prices declined by 0.08% while energy prices rose by 2.4%.
  • Prices for gasoline rose by 3.0% while prices for fuel oil increased by 1.6%, prices for electricity climbed by 2.3%, but prices for natural gas fell by 0.6%.
  • Energy prices are now 4.8% ABOVE their year ago level.
Overall consumer prices are now 2.3% ABOVE their year ago level; in September 2017, consumer prices were 2.2% ABOVE their year ago level.

The Core CPI ROSE by 0.2%, compared with market expectations for an increase of 0.2%.
  • Prices for commodities excluding food and energy commodities rose by 0.3%.
  • Gains in used cars & trucks (+2.6%), tobacco (+1.3%), were offset by declines in new vehicles (-0.2%), medical care (-0.1%).
  • Prices for services excluding energy services rose 0.2% with modest increase in owner's equivalent rent (+0.3%), medical care services (+0.2%), and shelter (+0.2%).
Core consumer prices are now 2.2% ABOVE their year ago level; in September 2017, consumer prices were 1.7% ABOVE their year ago level.